Around 100 banks investing $24bn per year agree to collective approach.
African public development banks have committed to support African heads of state and international organisations to finance the transformation of African economies. They have agreed to greater collective action to meet crosscutting development needs like climate change and the UN sustainable development goals.
There are 95 public development banks on the African continent and between them they invest $24bn every year, so their agreement at the Finance in Common Summit this month has the potential to really help establish a financial system consistent with the Paris Agreement and the sustainable development goals.
In dealing with the crosscutting issues of climate and private sector involvement, the banks have recognised their unique position to generate effective financing support and mobilise both private investment and domestic savings. However, they have also highlighted major obstacles like risk management that stand in the way of vital progress in tackling the impacts of climate change and further strengthening the African private sector.
The banks have therefore called on heads of state and international organisations to support them and provide a clearer mandate for meeting major challenges, additional capacity building and greater access to concessional resources. They have also proposed more be done to take advantage of the expected issuance of special drawing rights by the International Monetary Fund.
The collective statement from development banks comes as African countries face a huge investment gap and are struggling to address their debt service payments, which weigh significantly on their ability to finance development projects. But there has also been gradual progress in supporting trade and economic development through new infrastructure, such as the Kazungula Bridge across the Zambezi River.
The banks stressed together that all regions of the world have developed their economies by relying strongly on their local resources and that reinforcing African public institutions will lead to the emergence and strengthening of a robust local private sector and mobilise national, regional and international investments.
